Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Wallace of Saltaire Excerpts

Committee stage
Wednesday 20th March 2024 Lords Chamber

Moved by

[Lord Wallace of Saltaire]

1: Clause 1, page 1, line 7, leave out from “the” to the end of line 8 and insert “political or moral disapproval of foreign state conduct was the primary or sole factor in the decision”
Member’s explanatory statement
This amendment would clarify that political and moral disapproval must be seen to be a central factor and not a supplementary consideration in any relevant decision.

[Lord Wallace of Saltaire (LD)]

My Lords, as we are starting Committee, I will say a few things about how we should handle the Bill from now on. After Second Reading and the Commons stages, during which there were a large number of sharp criticisms from Conservatives, as well as others, about the quality of the drafting and the coverage of the Bill, I would have expected the Government, between Second Reading and Committee, to have produced a number of government amendments to clarify some of the many imprecisions in the Bill and perhaps to have arranged to meet some of us who had spoken at Second Reading. I am sorry that that has not happened, and I very much hope that, between Committee and Report, the Government will respond to some of the criticisms by bringing forward clarifying amendments, and that the Minister and the Bill team will be willing to meet with us to discuss some of the arrangements.

The lack of engagement is troubling, and the absence of government amendments at this stage is extremely worrying. I recognise that this is very much a Michael Gove Bill and that he, as Secretary of State, probably wishes to get it through, if possible, without amendment. But here we are in the amending House, and the Minister also has a duty, as a Lords Minister, to listen to and engage with the reasoned criticisms made of the many highly imprecise elements in this Bill, and to respond.

I have two amendments in this group. One raises the question of what is meant by “political or moral disapproval”, and whether the word “influenced” in the phrase

“influenced by political and moral disapproval”

is sufficient. The second, Amendment 6, refers to

“any person seeking to persuade the decision-maker”,

as well as the decision-maker.

As the Minister will know, environmental, social and corporate governance has a long history. It goes back to the Sullivan principles from the United States, which I am sure she will remember. They were formulated by Mr Sullivan, a director of General Motors, in the context of apartheid South Africa and set out a number of principles that companies and others should follow when dealing with investments and procurement. Those principles have since expanded into the whole ESG dimension, which we see actively discussed in Britain, the United States and a number of other market economy countries. The right wing in the United States is busily attacking them in favour of what one has to describe as an amoral capitalism, in which profit is the only thing you are ever allowed to think about. I recall that the first person who started attacking the Sullivan principles was Professor Milton Friedman, who strongly believed that companies have no other duties than to pursue the greatest profit possible for their shareholders.

We need to know what is meant by

“influenced by moral or political disapproval”.

My Amendment 1 suggests that it has to be very considerable in order to be a primary cause of the decision, not simply something that comes in as, or can be argued under Clause 5 to have been—we will get to that later in terms of judicial review—part of the reasons why the decision was taken.

One of our many worries about the Bill is the extent to which it opens the door to litigation through a great many of its imprecise terms. The question, therefore, is whether or not any indication of political or moral disapproval begins to get captured under the Bill, or whether this has to be the major reason why such a decision is taken.

I was very struck as I went through the impact assessment and the Explanatory Memorandum by the sheer lack of evidence that much of this has happened. We find a reference to a council that in 2014 discussed whether or not to, and that another council in 2016 discussed whether or not to. Neither of them actually did it, but they discussed it. “That is wrong and we should stop them doing things like that” seems to be a pretty thin basis on which to mount a Bill that has the sorts of penalties which this Bill begins to set out. That is very much part of our concerns.

Amendment 6 raises the question of whether it is not only the decision-maker who is going to be liable but

“any person seeking to persuade the decision-maker”.

Does that mean that the Guardian journalist who writes an editorial suggesting that this should be done is going to be caught by it? Does it mean that the lobby group that sends things to the decision-maker is going to be caught by it? Does it have to be a more direct approach? How do we identify that “any person”? This is the sort of drafting that should not appear in a Bill before this House. It has to be clarified or we shall do our utmost to remove it. I beg to move.

[Lord Palmer of Childs Hill (LD)]

I speak to exactly the same issue as did my noble friend. Mine is a simpler amendment. I work on the basis that the Bill will pass in some form or another and if one does a modest, sensible tweak to a Bill, it has a chance of being incorporated into the final version. My Amendment 2 —purely adds one word: “materially”. This would raise the threshold that needs to be met before a decision is deemed to be in breach of this prohibition. If it is not “materially”, things could be prohibited for something very minor. Having “materially” improves the Bill and makes it more logical—we are looking at things of substance, not things that are minor.

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[Baroness Neville-Rolfe (Con)]

The noble Lord is right—student unions are not covered, and I think that I made that clear at Second Reading. It is private activity. Clearly, what matters is the influence on public bodies, which is what we are discussing today.

To come back on the Occupied Palestinian Territories, obviously the Government recognise the risks associated with economic and financial activities in those settlements. We do not support boycotts of the Occupied Palestinian Territories. Such boycotts are inherently divisive and could lead inadvertently to negative effects on Palestinians as well as undermining the aim of this Bill, which is to ensure that the UK speaks with one voice internationally. That does not change existing government guidance on doing business in those territories. The Government do not recognise the settlements as part of Israel, as the noble Lord knows, and we have already moved to ban those responsible for violence in the West Bank from the UK—there have been some recent sanctions.

I have tried to answer the probing amendments. I hope that this provides noble Lords with clarification and a rationale for the scope of Clause 1, and I ask the noble Lord to withdraw his amendment.

[Lord Wallace of Saltaire (LD)]

My Lords, I am slightly better informed. We have many difficulties with this Bill. I must say that it would be much easier if it were simply a Bill about boycott of Israel and mainly about sanctions. It would be narrower, and we would know what we were talking about. But it is a Bill that is supposed to apply to every single foreign state in the world except for Ireland, which raises very large questions.

I disapprove strongly of the Rwandan Government’s support for M23 in the Congo civil war, and I disapprove very strongly of Myanmar’s behaviour towards the Rohingya, et cetera. Clause 1 is entitled “Disapproval of foreign state conduct prohibited”, which is itself a very uneasy label and not the sort of thing that ought to appear in legislation. I believed that I lived in a liberal democracy in which government’s reach was limited and free speech, as Conservative Peers are always telling us, is entrenched, and one is allowed to dissent. This appears to be extending the reach of government.

I appreciate that this is a DLUHC Bill that is aimed primarily at local authorities, although it is extended to include universities—and whether it includes student unions we will investigate further. As it happens, I had the current president of the Cambridge Students’ Union here last Wednesday, and I showed him a copy of the Bill—and he was convinced that it would apply to student unions; it is quite clear that some people would like it to do so.

There is a great deal more that we need to find out about all this. The closing down of public debate that the Bill implies is something that worries all of us a great deal. I am happy to withdraw my amendment for a moment, but we shall return to all these questions extensively as we move from one imprecise clause to another.

Amendment 1 withdrawn.

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[Lord Wallace of Saltaire (LD)]

My Lords, I am an academic and, in the course of my career, I have been an associated member of three colleges in Oxford and Cambridge. One has a governing body in the mid-30s; the second has one of around 50; and the third has one of nearly 100—much too large, I quite agree. The chilling effect of this clause on those three colleges would be considerable, precisely because it is not entirely clear what it means by the individuals who make the decision for the decision-maker. That requires a great deal more clarification; at the very least, it ought to be in the Explanatory Notes. This is another attempt to ask the Government to come back with something which is a great deal clearer.

In my career, I have also been a historian and an analyst of foreign policy. It is an area in which we spend an awful lot of time defining, discussing and describing decision-making. We very often disagree sharply with each other because it is very difficult to define, for example, exactly who took the crucial decision that started the First World War. Baroness Henig, sadly no longer with us, wrote several books on the subject. The noble Lord, Lord Roberts of Belgravia, has written several books entirely disagreeing with what other historians have said about various crucial decisions.

That is, again, part of our problem: when a complicated decision is taken, who takes it? How many people are complicit? If you are a member of the council committee which takes the decision and you abstain on the vote—or vote against it—are you also part of the decision-making or not? There is, to say the least, a cloud of uncertainty around this phrase. Perhaps the noble Lord, Lord Wolfson of Tredegar, understands it; I must say that I do not.

[Lord Johnson of Marylebone (Con)]

My Lords, I would also like to probe a little more on the meaning of “decision-maker” in a higher education context, following on from the excellent speech by the noble Lord, Lord Wallace.

Universities are often very decentralised in their structures, and power can be distributed quite far and wide. It is not always concentrated in the vice-chancellor’s office; nor is the governance of universities often as clear- cut as it might be. I would appreciate some clarity as the Bill proceeds on who exactly is going to be identified as the decision-maker in particular situations. Do we mean specifically decisions taken by the executive management team of an institution, principally the vice-chancellor? Do we mean, for example, student unions?

I noted that in my noble friend the Minister’s response to the noble Lord, Lord Mann, that student unions were—if I heard her correctly—out of scope, because they are private bodies. This confuses me a little, because I thought the whole purpose of the Bill, from a political point of view, was to address precisely this issue: student unions getting on their soapboxes and making statements about BDS, and all the rest of it. If they are out of scope of the Bill, I really wonder why universities as a whole are still in scope. It is not the vice-chancellors, academics or heads of department who are making these kinds of noises; it is the student unions. If I understood my noble friend the Minister correctly, they are not even covered. I really question why universities are still in scope at all, but that is a question we will come to later in Committee.

The final point on which I would like some clarity from my noble friend the Minister is whether a decision-maker will also be deemed to be an individual academic, who may manage a research budget. Will the use of that research budget by the individual academic be part of the decision-making process captured by the Bill? If so, how will that be squared with the legal duties on the OfS, among others, to promote academic freedom and freedom of speech in our higher education institutions?

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[Lord Verdirame (Non-Afl)]

My Lords, I have just a few points and questions, following the discussion we have just had. The first point is to seek clarity on whether my understanding of the last three lines of Clause 1(7) is correct. I understand those three lines simply to be saying that, where the decision-maker is a collegiate body, the duty to have regard applies to the individuals within that collegiate body who are taking the decision. That is how I read those three lines, but I may be missing something.

The second point arises from the comment that the noble Lord, Lord Johnson of Marylebone, made about universities. I suppose it is a point that comes up both under these amendments but also under the next amendments and in particular Amendment 8. Paragraph 20 of the Explanatory Notes, which speaks to Clause 1, states:

“The ban in Clause 1 is not intended to prohibit a higher education institution from deciding to terminate a collaboration with a foreign university on the grounds of academic freedom”.


I read that as implying that, other than on those grounds, the ban would apply to a decision to terminate a collaboration with a foreign academic institution. I would like some clarity on this, because I was a bit surprised to see that my reading of the definition of “procurement decision” would not necessarily have included a collaboration with a foreign academic institution as a procurement decision. It certainly is not an investment decision, but is a collaboration with a foreign academic institution in scope of the ban potentially? That is what I would like to understand. If so, it raises the question that the noble Lord, Lord Johnson, raised, of whether the individual grant holder who has, for example, a research collaboration with a foreign institution, is within scope of Clause 1. That is not clear to me.

[Lord Wallace of Saltaire (LD)]

My Lords, I have had advice from a professor of law at Cambridge University that it is not within scope where the research funding is not public. It is then a private act, not a public act.

[Baroness Janke (LD)]

My Lords, very many points have been made about how the decision-maker is established. From the point of view of local government, in local councils there are very many ways of taking decisions that can be individual or corporate. The tiers of responsibility and the trails that decisions make throughout a large organisation would need to be explored if enforcement action was to be taken.

In addition, councillors, committees or even pension committees, as we heard earlier, are advised by experts and independent advisers, so it is not clear where the line of accountability is and who is responsible, who is to be identified for enforcement action. The public authority, as has been identified earlier, is the body that is talked about in relation to Clause 4, but it is not in the Bill and does not relate to any other part of decision-making. I add my plea for further clarification as to how the decision-maker is to be identified and how enforcement is to be pursued in light of that.

As far as pension funds are concerned, as a former member I know that expert advisers do take account of political situations in their evaluation of risk. Again, that may be intimidating for councillors or advisers and inhibit the quality of advice that is given.

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[Lord Wallace of Saltaire (LD)]

My Lords, I shall speak to Amendment 8. I declare an interest: I have two children, both scientists, working in universities. My son runs a microbiology laboratory at Edinburgh University that has a number of international research partnerships, including with Israeli academics. I am unaware, from everything my children have told me, that anyone is boycotting contact with Israel in microbiology. There are some highly regarded Israeli scholars who take part in a whole range of things.

There are course problems in some research partnerships with Chinese academics, sometimes now with Russian academics and sometimes with academics from particular Middle Eastern countries. One has to leave it to those who are running laboratories, which are highly international—I think my son currently has people from four different countries in his—because these matters require delicate arrangements. When it comes to the social sciences, particularly if you are teaching international relations and have a lot of research students, as I used to, and you are sending them out to study Saudi, Egyptian or above all Chinese issues, you are in really delicate areas.

I emphasise that any of those are private acts of a university—commercial partnerships most of all. When that gets into the question of how far we want the Government to interfere in the autonomy of universities, we do not always get it right. There have been research students and young scholars who have been imprisoned in the Emirates or imprisoned and killed in prison, as in Egypt. On one occasion I had to approach one of the intelligence agencies about some of our students at the LSE, immediately after 9/11, because some people had lost confidence in the people with whom they were dealing. That has to be left to the judgment of universities. I do not think there is a problem there, and I am therefore unhappy about the idea that Amendment 8 should be included within the scope of this Bill.

[Lord Johnson of Marylebone (Con)]

My Lords, while I am sympathetic to the intentions of Amendment 8, tabled by the noble Lord, Lord Mann, I wonder if it is ultimately going to be necessary, given that the Higher Education and Research Act 2017 gives the Office for Students powers to take action whenever an institution is in breach of the public interest principles it is required to uphold.

One of those principles relates specifically to academic freedom and the issues to which the noble Lord was referring with respect to Israel. All academic staff at an English higher education provider have freedom within the law to question and test received wisdom, and to put forward new ideas and controversial or unpopular opinions, without placing themselves in jeopardy of losing the jobs or privileges they may have at that provider. I think that essentially covers the points he was making in respect of academics being prevented from pursuing partnerships or research with universities in Israel or with Israeli academics. We have these provisions in law and the Office for Students has all the powers at its disposal to enforce them. So I am not sure that Amendment 8 is entirely necessary, although I understand why he tabled it.

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[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Lord, Lord Mann, for drawing the House’s attention to two important issues with his Amendments 8 and 9. Like my noble friend Lord Pickles, who it is a real pleasure to welcome to our debate, my noble friend Lord Wolfson of Tredegar and the noble Lord, Lord Collins of Highbury, I am really grateful for all the work that the noble Lord, Lord Mann, has done.

My noble friend Lord Pickles and I worked together in my retail days, when he was a leading influence in local government and I worked to have kosher and halal food in many of the Tescos that were spreading across the country. So there were lots of conversations over food. A focus on community concerns is what much of the probing has been about this evening—but that is for another group.

I remain of the view that we need to apply this Bill to universities as we are doing, and I am committed to having a comprehensive debate and discussion on the impact of the Bill on universities at the appropriate moment later in Committee.

As we have heard, the two amendments in this group would add two stipulations to Clause 1. Amendment 8 intends to ensure that the prohibition applies to a decision made by a university to enter into a commercial partnership with another university or research university in a foreign state. The prohibition in the Bill already covers higher education providers in their public functions, including when their procurement and investment decisions form part of a research collaboration. Decisions relating to a commercial partnership are, however, likely to constitute a private function—for example, a decision relating to a research partnership to develop a new product funded by a pharmaceutical company. The ban applies only to public authorities’ public functions, as we have heard, and private decisions are rightly out of scope of the Bill. I note what the noble Lord, Lord Mann, says, but it would be inappropriate to apply the ban to private functions, and it would take the Bill beyond the manifesto commitment.

We have been clear in the Explanatory Notes that Clause 1 is not intended to prevent a higher education provider deciding to terminate a collaboration with a foreign university on the grounds of academic freedom, if they deem it necessary in line with their statutory duties in Part A1 of the Higher Education and Research Act 2017 or other legislation. The Bill is about ensuring that universities and higher education institutions do not have a corporate view on a particular matter of foreign policy when making their investment and procurement decisions. It is right that the Bill does not stray into decisions that could threaten academic freedom, as helpfully highlighted by the noble Lord, Lord Stevens of Birmingham, who spoke at Second Reading. I am sympathetic to the points that the noble Lord, Lord Mann, is making, and the Government do not support academic boycotts, but this Bill rightly does not interfere with academic freedom or private activity.

I turn to the points made by the noble Lord, Lord Mann, about the Jewish community’s support for this Bill. The Jewish community in the UK is widely supportive of the Bill as drafted. Russell Langer, head of policy at the Jewish Leadership Council, provided the following statement in support of the Bill’s restriction on universities’ economic activities:

“Higher education institutions continue to come under pressure to adopt BDS policies ... This legislation will be a valuable tool in assisting our higher education in rejecting this effort”.


The Bill will sit alongside other measures that the Government are taking to protect academic freedom. The Higher Education (Freedom of Speech) Act 2023 will ensure that freedom of speech is protected and promoted within higher education in England, and it will strengthen existing freedom of speech duties and directly address gaps in the existing law. Without action to counter attempts to discourage or even silence unpopular views, intellectual life on campus for staff and students may be unfairly narrowed or diminished, which is why there was a commitment in the 2019 manifesto to strengthen this.

[Lord Wallace of Saltaire (LD)]

The Minister has just said that we need legislation to silence unpopular views. I have to say that, as a liberal, I find that one of the most illiberal things that we could consider doing. Did she mis-speak?